00:00How's the conference been? All Middle East so far?
00:03It's all been what, Middle East? It's been super hectic, but thank you for having us here.
00:07No, not at all. How does that show up in your world?
00:10Well, you know, there's two worlds that we live in today.
00:13There's a life of greed happening in the world of AI,
00:17and there's a world of fear that is happening because of the Middle East.
00:21So what is so interesting today, you see the valuation of businesses in AI to be very high,
00:27but that anything related to energy and those related to energy has been depressed except for the price of the
00:33oil.
00:34But anything related to that has been in a different world.
00:37So we think today in the very short term, uncertainty is extremely high.
00:42The cost of capital has risen, which means also for us to underwrite businesses has also rise.
00:48The good thing about it, we can become more selective in the businesses we do.
00:51And lastly, we're looking now, really focused on energy security, digital infrastructure.
00:58Those are kind of the two things that really need to focus on the short term.
01:02You also have some exposure to the Middle East.
01:04You're planning to acquire more land in Mecca on top of the hotel and land acquisition you announced last year.
01:10How are those efforts being impacted by this Iran war?
01:13Obviously, we can't go there as often as we would like.
01:17It's a bit harder today to try to recruit foreigners to come to that part of the world.
01:22So we're really looking at locals.
01:24But we will continue to invest in the Middle East, especially in Mecca,
01:28because really it's amazing that they've opened up Saudi for us to invest in.
01:33So we're doubling down on that effort because I think in the long term,
01:36Mecca will always be Mecca.
01:38It will always be a very good investment.
01:39And our job is really to build on that business.
01:43And our idea is to build locals and also bringing Indonesians to that part of the world.
01:47Again, the Middle East is really top of mind.
01:50It has been in this conference for the past two days.
01:53And for all of us, you know, we share the same sentiment.
01:56I think we need to have peace and we want certainty to be back.
02:00But we don't know how long will that last.
02:02I mean, we look at this until potentially year end.
02:05Yeah, I mean, we had a guest early on who said, even if this ended tomorrow,
02:10we'll be here weeks and months trying to figure out where, you know,
02:13when we can get the oil we've ordered and everything in between.
02:16Domestically, are you guys playing a role at all in trying to cap
02:20or alleviate the high energy prices there that consumers feel?
02:24That's a fiscal policy by our Ministry of Finance and by the government.
02:28We think politically, I think it's important to still have the fuel subsidies,
02:32especially for the poor and those that are not wealthy.
02:35But I think overall for us, what we need to focus on is on the energy security.
02:40So looking at upstream assets, thinking about having enough oil storage for our country.
02:45And also a second one that we need to do regardless is what's happening in the AI world,
02:49which related to digital infra.
02:51These are the two worlds.
02:52But you know what's interesting in the AI world?
02:55They need more energy, right?
02:57They need more tokens.
02:58Tokens is related to unit of energy.
03:00And what's interesting today, Indonesia offers probably the best access for energy
03:04in terms of renewable energy and obviously the fossil fuel that we have.
03:08But number two, access to clean water.
03:10And we have a lot of land.
03:12And lastly, we have the biggest amount of population.
03:15300 million people are close to it.
03:17So these are users, obviously, of AI in the future.
03:21Have you, yeah, I mean, it's interesting how you swear, right?
03:24The greed of AI and the fear of Iran.
03:28How are you looking at just where you put your money now?
03:32Is it being redirected in any way?
03:34And if so, where?
03:35We are thinking probably more carefully of these two because I think these two worlds will meet.
03:41At the end, for AI to grow, you need energy.
03:44So, you know, obviously, we're very constructive in energy.
03:47And Indonesia is a net energy exporter to the world.
03:50We have it through coal.
03:51And obviously, we import the oil.
03:53But we are the largest exporter of coal and as well as nickel.
03:55So we have to think smartly.
03:57I think where we have the right to win in energy, we will double down.
04:00But we would love to trade energy for AI.
04:03I think that's probably where we're going in the short term.
04:06And speaking of that, you mentioned energy security is one thing you were already looking at.
04:12But this is just a reminder that we need to look at that even deeper.
04:15Do you have a dollar figure in mind that you would want to be investing short term or longer term?
04:20I think we mentioned earlier this year with Bloomberg, I think around $14 billion will be invested across a variety
04:25of asset classes.
04:27I think now, given what's going on today, there's probably going to be a bias towards energy security.
04:33Of the $14 billion?
04:34Of that $14 billion, there will be a bigger bias towards energy security.
04:37There will be a bias towards critical minerals because all of this has to be related to the security issue
04:43that we have in our country.
04:45And with this war, I don't think it's a one-off.
04:48That will also create more uncertainty in the world.
04:51And we're not even talking about the election in the U.S., which potentially can create greater uncertainty.
04:56Are you expecting, because prices of energy assets, as you point out, are going up.
05:00Are you expecting to have to pay more as you get into those investments?
05:04As we are a net exporter, I think the price of coal is already going up because it tied really
05:08well with oil.
05:09Price of nickel has gone up because it's related very well to oil.
05:12So I think prices of raw material, prices of upstream assets will go up.
05:17And I think this will not be a short-term event because there's also increasing demand because of AI.
05:22The amount of capital being put to AI also put pressure on the demand for energy.
05:27So now with this war, because obviously these are man-made, the impact, even if we finish the war this
05:33week or next week,
05:34you will still feel it for the next nine months or 12 months.
05:37So in a way, I have a feeling that you will have a slightly new normal happening both in oil,
05:43gas, coal, as well as other critical minerals.
05:47I want to get your take on what's going on with the Tubin refinery.
05:52There was some stalling, I guess, of this project with Pertamina and Rosneft.
05:59Can you tell us, is there any update on that?
06:00That's an old story, but I think the story of the refineries overall, I think the need for refinery is
06:06there.
06:07We need to process the oil.
06:09So whether it's through Tuban or even we have an existing refinery that we can build upon it,
06:15I think that's probably going to be a story in the midstream of the energy stream, right?
06:20So we have to look at upstream, which is mission critical, and then obviously the refinery and then the oil
06:25storage.
06:27This deal with CIC, your China-related plans, why don't you give us, is that still an old story?
06:33Is there a newer version to that?
06:35We're going, obviously, we're going to Beijing soon.
06:37Okay.
06:37So just to follow up on this, you know, we just recently also, one of the things we're doing the
06:42first 12 months is to do partnerships with other sovereign wealth funds.
06:45Okay.
06:45CIC, one of them, we just recently did it with QIA.
06:48That was the very first in Qatar Investment Authority.
06:50And we just announced two deals with them, with QIA on real estate in Indonesia, in Lavon Bajo.
06:56With CIC, it's really to be able to bring partnership capital, to invest in general partners, fund managers.
07:02Okay.
07:03To invest in them and for them to bring transfer of knowledge into Indonesia.
07:07How big are we talking?
07:08We're committing about half a billion each to start, so about a billion dollar of capital.
07:14Okay.
07:15Maybe Russian direct investment fund.
07:17Is there anything on there, too, you can tell us about?
07:19No, not yet.
07:19But I know our president just visited Russia because of the lifting of the embargo, talking about energy security, et
07:25cetera.
07:26I think with this new world order, too, I think it also changes the dynamic with Russia.
07:30But again, things to follow up.
07:32But right now, we just need more deals.
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